A Tale of Three Cities

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

This is the opening line from another brilliant piece of writing, this time Charles Dickens’, “A Tale of Two Cities.” The novel which is set in both London and Paris depicts the lives of the French peasantry and aristocracy during the French Revolution, while noting the similarities between French society then and Victorian England of the mid 1800’s.

Over the centuries, “A Tale of Two Cities” has lost none of its potency. The narrative of social and economic injustice and the dangers thereof apply not only to Paris and London, but to Washington D. C., of 2014 or any other modern city.

Like the French and English, American income and wealth inequality has never been so obscene. And while we are bereft of nobility, we are full of; literally dripping with our own aristocracy in the form of the uber-rich, political dynasties, corporate royalty and the gods of sports and entertainment.

Consider for example the salaries of American CEO’s versus that of the average American worker. “The median pay package for the leader of a large company just passed the $10 million mark. A chief executive now makes about 257 times the average worker’s salary, up sharply from 181 times in 2009.”

There are some who might argue that the salaries of corporate titans are well-earned, that the wealthy are the risk takers, the job creators and are therefore deserving of the best. They further contend that any talk of income or wealth inequality is nothing more than class warfare, thinly disguised.

Blackacre takes exception to this notion. Corporate CEO’s are hardly 257 times more deserving of remuneration than the rest of us. They are not 257 times more intelligent than the average worker and are no more loyal, hard-working or productive than anyone else. They are not hundreds of times more patriotic than regular people, do not tithe at 257 times the rate of other church goers and do not love their mothers 257 times more than you or I.

Moreover, wealth affords those who possess it the luxury of avoiding, mitigating and/or covering their risks. It is we, the average Joe or Jane who are the real risk takers.

Akin to the peasants of France and the denizens of England, we peril the “freedom” of poverty and need our entire risk filled existence. We risk work related injury and death in the factories and coal mines of America. We hazard working at jobs that abuse us, pay slave wages and lack insurance coverage, disability benefits or retirement plans. We gamble that we will not be arbitrarily or unjustly fired and that our positions will not be replaced by soulless automatons.

We bet the farm that public funds will be used to create long term, well-paying jobs that will not disappear overseas. We chance that the roads, infrastructure and tax credits given to corporate America will not be negated by corporate raiders who bleed bone dry otherwise viable companies.

We wager that oil spills and “fracking” will not damage an environment already teetering on the edge of radical change. We wager that corporate accountants will not cook the books, that hedge fund managers will properly manage their funds and that banks that are too big to fail, will not in fact fail. We then fervently pray that avaricious financial wizards will not crash our economy and walk away “Scott free” while we, modern-day “Gaspards” struggle to pick up the pieces.

Furthermore, this disparity in wealth and income has nothing to do with merit. “CEO’s are paid 257 times more than the American worker not because they deserve or have earned it but because of payment in stocks, peer pressure, the superstar effect, friendly Boards and in an ironic twist stricter scrutiny. According to a 2005 article by Benjamin Hermalin, a professor at the University of California, Berkeley, when a company is in duress and/or a CEO faces a greater chance of dismissal, companies often raise pay to compensate for the risk of job loss.

“Accounting scandals of the early 2000s showed that some executives actually gamed the system, ultimately at shareholder expense. Executives at firms such as Tyco and Enron tinkered with the books to boost corporate incomes, share prices and the fortunes of insiders and senior managers.” Even when they fail and fail miserably CEO’s are still rewarded with multimillion dollar golden parachutes.

“The low wages of the American workers is similarly undeserved. Workers are paid 257 times less than CEO’s for reasons other than their contributions to the bottom line, i.e., automation in the form of robots and computers, high unemployment, which shifts the balance of power to the employer, globalization, weaker unions and low inflation.”

Nor are the wealthy true job creators, political slogans to the contrary. Jobs are created by the demand for goods and services which is fueled by a solid middle class. Businesses are made possible and profitable in substantial part by public contributions in the form of business incentives, infrastructure development, tax benefits and favorable public policy.

The real explanation for income and wealth disparity in America and the world at large is simply this. The fix is in. The economic, political and legal systems are rigged, slanted in favor of the wealthy against the poor; skewed to benefit the haves at the expense of the have-nots.

This is the reason bankers and Wall Street executives were not held personally and criminally responsible for the 2007 financial collapse; why the best way to rob a bank is to own one. This is why a well-known sibling of a wealthy music duo has not been charged with battery and domestic violence even though her crime was video taped and disseminated to the world. Public policy and the law have always treated the rich and famous more kindly than others.

Sadly, Blackacre has no solution to the rigged nature of society. We do not suggest the engagement of the guillotine known as the French razor. We loathe the type of violence practiced by the Jacobins during the “Reign of Terror”. And since the tale of political, economic and social inequality has been told and retold since the dawn of man, there may well be no long-term solution.

But at the very least we can take the false and misleading statements of politicians, vulture capitalist and other snake oil salesmen with the mountain of salt they deserve. If calling out the fixed system of social and economic injustice constitutes class warfare, then so be it.

6 Comments

Jeff Sullivan
June 2, 2014

How, pray tell, do we determine the “worth” of a person? Who gets to decide? HOW should that decision be made? You complain – but you offer no alternative, nor even a theory on which to base that alternative.

Put a different frame on this: the top 25 largest private employers in the US employ over 9,000,000 people, 25 of whom are CEOs. That alone is a ratio of 360,000:1.

A bad strategy can cost billions in shareholder value and thousands if not tens of thousands of jobs. As an example, how many jobs has lousy management at General Motors cost not just to other American companies, but to Japanese companies?

The notion that no one is 257 time smarter, or 257 more hardworking, or loyal, or patriotic is a false standard. Can someone be 257 times more able to build shareholder value than the average worker? I dunno – ask Warren Buffet or Steve Jobs.

The criteria is the perception of the board. Is it out of whack? Maybe. But who gets to decide? The shareholders pay their salaries. The shareholders elect the directors. The directors make the decisions.

You pull up two examples, Tyco and Enron. The executives there did not get golden parachutes – they got the steel bars of prison. So I call that a rather poor pair of examples to build a generalization on.

First, thanks for telling me that the reply function on my word press was not working. If not for you, I would not have known.

Second, I have an idea I’d like for you to ponder. While I stand by my conviction that the compensation of CEOs is absolutely, positively outrageous and is not warranted regardless how many people their companies employ, your perspective is well argued.

So why don’t you do a guest blog and let me and other Blackacre followers respond to you? This idea is at least food for thought, would you not agree.

Patrick Jackson
June 2, 2014

Truer words could not have been spoken by anyone any better than these. The disparity between the haves and the have not’s is a great concern for not only the American economy, but the human economy. The willingness to work to gain riches and wealth has often lead people to conduct themselves in ways that are often unethical, unbelievable and unlawful. Many of the references throughout your comments are examples of the actions people have taken and are willing to take to achieve wealth. There are those who say that “Money is the root of all evil”. The statement is that “The LOVE of Money is the root of all evil”. The reality is that excessiveness or GLUTTONY is the real problem. So much of a problem that one of the seven deadly Sins that many Christians have been taught to not commit is GLUTTONY.

On the other hand, if your skill sets or abilities make such a contribution to society or mankind that riches are the result, then those rewards translate into an enhanced quality of life, which in turns create the opportunity to help others, then it seems that great wealth is not the problem that it appears to be looking from the outside. The majority of humans have managed survival but may not be able to manage riches as well as they perceive they would. But all want the chance to fail at being rich!
Patrick Jackson